CRITICISMS 


:,  OX  THE 


(■'-7 


RECENT  FINANCIAL  POLICIES 


•-        -   -    -      g 


■   L.        \  1 


OP 


THE  UiNITED  STATES  AND  FRANCE, 


INCLUDING 


AN  ATTEMPT  TO  EXPLAIN  THE  CAUSE  OP  THE 
J  J_       PRESENT  PROSTRATE  CONDITION  OP  THE 


7" 


SOUTHERN  STATES. 


iki 


1. "/ ; 

■1     '                      .                                                                                                                                 .     ' 

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1 

••        '*     HEJS^RY  CAKP^Y  BAIRD.    - 

.l'.|t;..,'» 

'1 

> 

1 

"The  time  was  when  men  were  indicted  for  intrudinj^  into  public 
oflSces  the  duties  of  which  they  were  incapable  of  discharging,  and  it 
is  to  be  hoped  that  that  day  will  again  return." 

Bakon  Tkntibbdbn,  Lord  Chuf  Justice  o/tJi^Kmg's  Bench. 


]..  ..'.' 


PHILADELPHIA. 
HENRY    CAREY    BAIRD    &    CO., 

INDUSTRIAL  PUBLISHERS,   BOOKSELLERS,  AND  IMPORTERS, 
810  WALNUT  STRBliT. 

la75. 


THE  RECEST  FHANCIAL  POLICIES 

■      \.!      '    ■    ,     '        '<'■■]  T     '  OF  THE         .   •      I   .■.!         'V'll'   r.|   1  ■     ■ 

UNITED   STATES  AND  FRANCE. 


Whj  c  National  Debt  ruay  become  a  National  Blessing.     How 

the  luorld  is  misgoverned. 

From  the  Piiiladelphia  Inquirkr,  August  6,  1874. 

To  the  Ediior  of  the  Philadelphia  Inquirer : — 

As  long  ago  as  the  time  of  Montesquieu  the  idea  prevailed  among  the 
people  that  "a  national  debt  was  a  national  blessing,"  for  he  tells  us 
that  "  some  have  imagined  that  it  was  for  the  advantage  of  the  State  to 
be  indebted  to  itself;  they  thought  that  this  multiplied  the  riches  by 
increasing  the  circulation."  The  fact  was,  the  people  had  seen  that 
accompanying  a  national  debt  or  its  increase  were  found  increased  socie- 
tary  action,  increased  production,  trade,  and  commerce,  in  a  word  gene- 
rally increased  prosperity;  and  while  not  examining  the  subject  very  pro- 
foundly, or  even  closely,  they  very  naturally  inferred  that  that  condition 
of  prosperity  flowed  necessarily  and  alone  fiom  the  very  existence  of  the 
debt  itself.  They  failed  to  appreciate  the  fact  that  such  a  debt  only 
became  a  national  blessing  by  reason  of  its  forcing  the  rulers  of  the 
country,  on  account  of  the  public  necessities,  to  pursue  such  a  policy  as 
was  for  the  public  weal,  and  further,  that  really  enlightened  statesmanship, 
without  a  debt,  was  capable  of  giving  to  the  State  all  such  blessings 
unaccompanied  by  any  of  the  burdens  and  other  drawbacks  of  a  debt. 
Let  us  illustrate  this  position  by  means  of  exarap/les  drawn  from  the 
recent  experiences  of  our  own  country  and  of  France. 

The  breaking  out  of  the  rebellion  in  the  winter  of  1860-61  placed 
the  Treasury  of  the  United  States  in  such  a  position  that  it  was  obliged 
to  borrow  money  at  as  high  a  rate  as  12  per  cent,  per  annum.  Never- 
theless, with  the  advent  of  Mr.  Lincoln's  administration  and  tiie  subse- 
quent commencement  of  hostilities,  Congress,  co-operating  with  Secretary 
Chase,  pursued  the  plan  of  issuing  demand  notes,  not  a  legal  tender,  in 
limited  amount,  and  bonds,  but  mainly  relied  upon  the  latter,  giving, 
liowever,  but  little  heed  to  the  condition  of  the  people,  which  was  certainly 
very  sad.    To  float  these  |)90(}s  i^  Uoca^ue  necessary  to  appeal  to  the 


8 

patriotism  of  the  banks,  and  in  return  for  this  patriotism  Mr.  Chase  de- 
manded payment  for  bonds  in  coin,  of  which  the  banks  soon  becoming 
exhausted  were  of  necessity  forced,  December  30,  1861,  to  suspend  specie 
payments.  Business  was  then  and  had  been  for  a  twelvemonth  com- 
pletely prostrated,  except  so  far  as  the  demands  of  the  government  for 
services  and  commodities  had  tended  to  revive  it. 

By  the  end  of  January,  1862,  the  national  finances  were  upon  the  eve 
of  a  total  collapse,  and  from  that  date  s'xty  days  more  of  the  policy 
which  the  department  had  so  far  followed  would  have  completely  bank- 
rupted the  Treasury,  dissolved  our  armies,  scattered  our  navy,  and  caused 
the  rebellion  to  become  an  accomplished  and  a  successful  revolution. 
Nothing  but  a  full  realization  of  these  facts,  and  with  perdition  clearly  in 
view,  and  the  recognition  of  the  necessity,  under  the  circumstances,  of 
giving  to  any  Treasury  notes  which  were  to  obtain  general  circulation, 
the  legal  tender  quality,  forced  the  Secretary  and  Congress  to  agree  to 
the  Legal  Tender  Act.  Even  under  these  terrible  circumstances  many 
and  humble  were  the  apologies  which  were  made  for  so  far  invading  the 
sacredness  of  capital,  even  to  save  a  nation  of  freemen.  So  humble  were 
these  apologies  from  the  friends  of  the  bill,  so  strong  were  the  protests 
in  behalf  of  capital,  from  the  enemies  of  it,  that  the  Hon.  William  Kel- 
logg, of  Illinois,  found  himself  constrained  in  debate,  in  the  House  of 
Representatives,  February  6,  1862,  to  utter  these  eloquent  and  burning 
words : — 

"  Mr.  Chairman,"  said  he,  "  I  am  pained  when  I  sit  in  my  place  in 
the  House  and  hear  members  talk  about  the  sacredness  of  capital ;  that 
the  interests  of  money  must  not  be  touched.  Yes,  sir,  they  will  vote  six 
hundred  thousand  of  the  Jioiver  of  the  American  youth  for  the  army,  fa 
be  sacrificed,  without  a  blush;  but  the  great  interests  of  capital,  of  cur- 
rency, must  not  be  touciied.  We  have  summoned  the  youth  ;  they  have 
come.  T  would  summon  the  capital,  and,  if  it  does  not  come  volun- 
tarily, before  ti)e  Republic  shall  go  down,  or  one  star  be  lost,  I  would 
take  every  cent  from  the  treasury  of  the  States,  from  the  treasury  of 
capitalists,  from  the  treasury  of  individuals,  and  press  it  into  the  use  of 
the  government.      What  is  capital  worth  without,  a  government  P*  , 

The  result  was  that  the  necessities  of  the  hour  cut  short  debate,  over- 
whelmetl  all  protestants,  and  forced  the  early  passage  of  the  bill  by  a 
decided  majority  ;  and  thus  did  the  very  weakness  of  the  public  Treasury 
become  a  source  and  cause  of  strength  by  obliging  Congress  to  issue  a 
currency  which  brought  out  the  full  power  of  the  country,  much  of 
which  had  hitherto  lain  dormant  and  unavailable  even  in  more  happy 
days.  But  for  the  greenback  at  that  hour  the  rebellion  would  never 
have  been  crushed,  the  nation  would  have  been  divided  iuto  numerous  and 
jarring  fragments,  and  the  great  body  of  the  people  would  have  been 


mined.  It  proved  to  be  one  of  the  most  potent  engines  ever  called  to 
the  aid  of  a  people  or  a  State. 

One  might  naturally  infer  that  a  measure  which  had  proven  itself  so 
powerful  and  so  beneficent  in  the  hour  of  national  trial,  amid  war  and 
destruction,  might  be  equally  so  in  peace  in  building  up  that  which  war 
liiul  pulled  down.  Not  so,  however,  have  thought  our  great  finance 
ministers  and  other  statesmen — our  McCullochs,  Boutwells,  Richardsons, 
Sliermans,  Jone.jes,  and  Grants !  As  soon  as,  by  the  combined  opera- 
tions of  a  cessation  of  war  and  of  the  wringing  of  taxes  from  the  people, 
the  National  Treasury  had  become  strong  enough  to  have  no  fear  for 
its  own  future,  and  giving  no  heed  whatsoever  to  the  people,  the  green- 
back was  denounced  as  "  a  forced  loan,"  "  inflated,  irredeemable  paper," 
etc,  etc.,  and  efforts,  to  some  extent  successful,  were  made  to  retire  it, 
and  the  consequences  have  been  nine  years  of  societary  paralysis,  which 
have  cost  the  country  ten  times  the  pecuniary  cost  of  the  war,  and  left 
the  people  so  much  prostrated,  and  in  such  a  state  of  financial  exhaus- 
tion that  they  are  unable  any  longer  to  carry  the  indebtedness  of  their 
government,  which  latter  is  now  obliged,  in  peace,  to  call  upon  foreign 
credit-mongers  to  do  for  it  that  which,  in  the  midst  of  war  and  ruin,  its 
own  people  were  able  to  do  and  did  with  such  alacrity.  Seeing,  then, 
how  much  more  ruinous  than  war  itself  are  incompetent  rulers,  when 
their  hands  are  not  tied  by  the  force  of  public  necessities  and  considera- 
tions, is  it  in  the  least  to  be  wondered  at,  that  the  idea  should  have  gone 
abroad  that  a  "  national  debt,"  when  so  great  and  so  pressing  as  to  over- 
rule and  control  the  ignorance  and  incompetence  of  public  officials,  "is  a 
national  blessing  ?" 

Let  us,  in  the  same  connection,  turn  to  the  contemplation  of  France 
and  her  recent  experiences.  Carried  into  an  unsuccessful  and  disastrous 
war  by  her  late  imperial  master,  she  had  to  pay  not  merely  her  own  bill 
of  costs  but  that  of  her  conqueror,  in  the  shape  of  an  indemnity,  the 
heaviest  ever,  in  modern  times,  exacted  of  one  country  by  another.  By 
the  end  of  1872  this  war  had  increased  the  funded  debt  of  France 
$1,649,000,000.*    The  world  believed  her  ruined,  but  she  was  not.    The 

*  Note,  April  15,  1875, 

It  is  now  computed  that  the  entire  cost  of  the  war  to  France  wa.s  as  follows: — 

Sams  paid  by  Franco  for  her  own  military  operations  521,006,.'')80 

Sums  paid  to  Germany       ......  1,090,963,080 

Collateral  expenses 193,49(5,040 

Rt^quisitions  in  cash  or  objects,  estimated  at      .         .  72,y00,U0O 
Loss   of  profits   consequent  upon  tlie   suspension  of 

trade,  estimated  at 145,800,000 


$2,021,1(J5,700 

See  Blackwood's  Maffaxine,  February,  1876.     Article,  The  Payment  of  the  Five 
Millards. 


6 

increase  of  her  exports  and  imports  for  1873  over  1809  was  $259,814,600, 
and  it  is  believed  by  competent  authority  that  her  internal  commerce  had 
grown  in  like  proportion. 

In  September,  1810,  the  Bank  of  France  suspended  specie  payments, 
and  by  the  end  of  October,  1873,  its  circulation,  which  had  in  June, 
1870,  been  but  $275,000,000,  had  reached  $002,000,000,  thus  putting 
in  practice  a  plan  wuich,  in  1848,  had  been  resorted  to  with  marvellous 
results.*    The  people  now  rallied  to  the  support  of  the  government,  and, 

*  Efficacy  of  the  French  plan  of  remedying  a  Drain  of  Specie,  namely — by 
simply  declaring  Bank  Notes  to  be  /c/yw/  tender:  as  depicted  in  the  following 
extract  from  the  Times,  of  the  ICth  February,  1819; — 

"  Ag  a  mere  commercial  Bpecnhition,  with  the  assets  which  the  bank  held  in 
its  hands,  it  might  then  have  etoppeil  payment,  and  liquidated  its  affairs  witli 
every  probability  that  a  very  few  weeks  would  enable  it  to  clear  oflF  all  its  lia- 
biliti(.'8.  But  this  idea  was  not  for  a  moment  entertained  by  M.  D'Argout,  and 
lie  resolved  to  make  every  elToit  to  keep  alive  what  may  be  termed  the  circula- 
tion of  the  life  blood  of  the  community.  The  task  was  overwhelming.  Money 
was  to  bu  lound  to  mc<?t  not  only  the  demands  on  the  bank,  but  the  necessities, 
both  public  and  private,  of  every  rank  in  society.  It  was  essential  to  enable 
the  manufacturers  to  work,  lest  their  workmen,  driven  to  desperation,  should 
fling  themselves  amongst  the  most  violent  enemies  of  public  order.  It  was 
essential  to  provide  money  for  the  food  of  Paris,  for  the  pay  of  the  troops,  and 
for  the  daily  support  of  the  ctcUers  uationaux.  A  failure  on  any  one  ])oint 
would  have  led  to  a  fresh  convulsion.  But  the  panic  had  been  followed  by  so 
great  a  scarcity  of  the  metallic  currency,  that  a  few  days  later,  out  of  a  pay- 
ment of  26  millions  fallen  due,  only  47,UU0  francs  could  be  recovered  in  silver. 

"  In  this  extremity,  when  tlie  bank  alone  retained  any  available  sums  of 
money,  the  Government  came  to  the  rescue,  and,  on  the  night  of  the  LOth  of 
March,  the  notes  of  the  hank  were  by  a  decree  made  a  lei/al  tender,  the  issue  of 
tlieso  notes  being  limited  in  all  to  350  millions,  but  the  amount  of  the  lowest 
of  them  reduced  for  the  public  convenience  to  100  francs.  One  of  the  great 
difficulties  mentioned  in  the  report,  was  to  print  these  100  franc  notes  fast 
enough  for  the  public  consumption — in  ten  days  the  amount  issued  in  this 
form  had  reached  80  millions.  No  sooner  was  the  Bank  relieved  from  the 
necessity  of  paying  away  the  remnant  of  its  coin,  than  it  made  every  exertion 
to  increase  its  metallic  rest.  About  40  millions  of  silver  were  purchased  abroad 
at  a  hii'h  price.  More  than  100  niillions  were  made  over  in  dollars  to  the 
treasury  and  the  executive  departments  in  Paris.  In  all,  taking  into  account 
the  branch  banks,  fidtJ  millions  of  five-franc  pieces  have  been  thrown  by  the 
bank  into  the  country  since  March,  and  her  currency  was  thus  supijlied  to  all 
the  channels  of  the  social  system. 

"Besides  the  strictly  monetary  operations  the  bank  of  France  found  means 
to  furnish  a  series  of  loans  to  the  uovernmeut — r)0  millions  on  exchequer  bills 
on  the  31st  of  March,  30  millions  on  the  ritli  of  May,  and  on  the  3d  of  June, 
l.'jO  millions,  to  be  paid  up  before  the  end  of  March,  1849;  of  this  last  sum 
only  one-thrrd  has  yet  been  required  by  the  State.  The  bank  also  took  a  part 
in  the  renewed  loan  of  250  millions,  and  made  vast  advances  to  the  City  of 
Paris,  to  Marseilles,  to  the  department  of  the  Seine,  and  to  the  hos])ital«, 
amounting  in  all  to  2(!0  millions  more.  But  even  this  was  not  all.  To  enable 
the  nianu/actnring  interests  to  Weather  the  storm,  at  a  moment  when  all  the 
sales  were  Interrupted,  a  decree  of  the  National  Assembly  had  directed  ware- 
houses to  be  opened  for  the  reception  of  all  kinds  of  goods,  and  provided  that 
the  registered  invoice  of  these  goods,  so  deposited,  should  be  made  negotiable 
by  endorsement.  Tlie  Bank  of  Franco  discounted  these  receipts.  In  Havre 
alone,  18  millions  were  thus  advanced  on  Colonial  produce,  and,  in  Paris,  14 
millions  on  merchandise — in  all,  60  millions  were  thus  made  available  for  the 


6 

pouring  out  their  means  with  n  lavish  hand,  the  loans  were  taken,  and 
$1,100,000,000  of  indemnity  was  paid  to  Germany  in  advance  of  its 
falling  due.  Taxation,  too,  has  been  piled  upon  taxation,  so  that 
coffee,  which  lately  yielded  some  $5,000,000,  now  yields  $14,000,000 ; 
the  revenues  from  sugar,  which  used  to  be  $21,000,000,  are  now 
$35,000,000  ;  stamp  and  registration  duties  have  risen  from  $95,000,000 
to  $115,000,000;  the  revenues  from  customs,  which  used  to  be 
$21,000,000,  have  now  reached  $52,000,000.  Within  two  years  no 
less  than  six  laws  have  been  passed  increasing  the  duties  on  beverages, 
nnd  articles  of  food  have  been  burdened  in  like  proportion. 

The  combined  operation  of  patriotism  in  furnishing  loans,  and  of 
taxation  in  bringing  in  revenues,  has  been  to  strengthen  the  hands  of 
the  National  Treasury ;  and  what  is  the  result  ?  Having  borrowed 
$306,000,000  from  the  Bank  of  France,  the  government  has  already 
paid  it  back  $133,000,000,  and  by  reason  of  this  and  other  accumu- 
lations the  bunk  has  been  enabled  to  reduce  its  circulation  from 
$602,000,000,  October  30,  1873,  to  $4iJ5,000,000,  Juno  25,  18U.  It 
has  also  reduced  its  private  loans  and  discounts  from  $277,000,000  to 
$170,000,000,  and  has  accumulated  specie  from  $145,000,000  to 
$235,000,000.  Thus,  between  October,  1873,  and  June  25,  1874,  but 
eight  months,  there  has  been  an  actual  contraction  of  the  purchasing 
power  of  the  people  in  the  face  of  the  immensely  increased  taxation,  as 
follows : — 

Circulation  of  the  bank 107,000,000 

Specie 90,000,000 

Loans  and  discounts 107,000,000 


^304,000,000 

That  France  is  not  utterly  and  completely  ruined,  that  all  govern' 
raent  has  not  been  overthrown  and  society  resolved  into  its  elements,  must 
be  a  cause  for  wonder  and  amazement  to  every  thoughtful  man  who 
studies  these  figures.  That  there  should  be  a  deficiency  in  the  revenues 
of  but  $5,250,000  created  by  diminished  production  of  taxation,  and 
another  of  $5,000,000  by  reason  of  the  refusal  of  the  Assembly  to  vote 
new  taxes  at  the  beginning  of  the  year,  seems  more  surprising  still. 
The  patriotism  of  such  a  people  is  not  merely  thrown  away  upon  such 
rulers,  but  places  _the  power  in  the  hands  of  the  latter  to  enslave  these 

purposes  of  trade.  Thus,  the  great  institution  had  placed  itself,  as  it  were,  in 
direct  contact  with  every  interest  of  the  community,  from  the  Minister  of  the 
Treasury  down  to  the  trader  in  a  distant  outport.  Like  a  huge  hydraulic 
machine,  it  employed  its  colossal  powers  to  pump  a  fresh  stream  into  the 
exhausted  arteries  of  trade,  to  sustain  credit,  and  preserve  the  circulation  from 
complete  collapse." — 2 he  Liank  Charter  Act  and,  the  liate  of  Interest,  Loudon, 
1873.     pp.  123-5. 


% 

people.  Were  not  those  rulers  experimenting  upon,  financially,  the 
most  ])ovverfuI  nation  of  which  there  is  any  record  in  history,  the  results 
of  their  experiments  would  be  apparent  in  the  destruction  of  their 
country.  Thus  far  the  only  effect  which  is  apparent,  beside  discontent, 
is  the  almost  complete  paralysis  of  business  in  Paris ;  but  what  care  the 
rulers  for  this,  so  long  as  it  does  not  drive  them  out  of  power  ? 

But  in  the  face  of  all  these  trials  we  are  assured  by  one  of  the  most 
careful  of  English  authorities*  that—     ■<  ■'  :  »..      •  .'  c.:  i'''-      1 

"For  the  first  time  in  modern  French  history,  the  peasant  and  the 
town  workman  have  been  brought  together  into  line.  Widely  as  they 
differ  in  their  view  of  its  form,  though  the  one  means  a  conservative 
bourgeoise,  scarcely  differing  from  the  English  monarchy,  and  the  other 
a  democratic  dictatorship,  both  peasant  and  workman  are  one  in  demand- 
ing the  Republic.  Nor  is  it  a  mere  toleration  of  the  Republic  that  the 
peasant  is  prepared  for.  ..It  is  a  settled  conviction  and  instinct.  To 
him  the  Republic  has  become  the  conservative,  safe,  and  moderate  insti- 
tution ;  it  is  identified  with  property;  it  represents  order ;  it  gives  a 
dignity  to  the  country  without,  and  puts  an  end  to  civil  war  within. 
The  parties  which  seem  to  him  to  rage  against  the  Republic  are  they  who 
breathe  anaichy  and  confiscation." 

Ruled  as  she  is  by  incompetency,  distracted  by  the  cabals  of  the 
adherents  of  three  deposed  dynasties,  surrounded  by  the  hostility  of  the 
imperialists  and  the  royalists  of  Europe,  and  ground  between  the  upper 
and  the  nether  millstones  of  taxation  and  contraction,  it  would  seem 
almost  impossible  that  even  the  great  wealth  and  the  greater  patriotism 
of  her  people  could  save  her.  If  they  do,  these  people  should  receive, 
as  they  will  most  justly  merit,  the  ever-enduring  admiration  of  mankind. 

The  great  lesson  to  be  learned  from  the  foregoing  experiences  of  the 
United  States  and  France  is  that  of  the  awfulness  of  the  responsibility 
which  men  take  upon  themselves  when  they  assume  to  become  the 
governors  and  the  law-makers  of  a  great  country,  and  of  the  justice 
and  force  of  the  ground  taken  by  the  late  Lord  Tenterden,  Lord  Chief 
Justice  of  the  King's  Bench,  who,  in  the  course  of  an  able  speech  in  the 
House  of  Lords,  some  years  since,  said  that  the  time  had  been  when 
men  had  been  indicted  for  intruding  into  public  offices,  the  duties  of 
which  they  were  incapable  of  discharging,  and  adding  that  he  hoped 
that  day  would  again  return. 

The  burden  of  misgovern  men  t  is  heavier  and  more  intolerable  to  a 
people  than  any  public  debt  which  the  credit  of  their  government  ia 
capable  of  accumulating,  and  the  resources  of  the  country  of  honoring 
and  protecting,  and  even  the  heaviest  of  these  debts  have  been  made  to 

^.  *  Frederic  Harrison,  ia  Fortniyhtly  Review^  June,  1874,  page  844. 


appear  as  blessings  when  the  condition  of  the  national  finances  has 
been  such  as  to  tie  the  hands  of  incompetent  governors,  and  thus  pre- 
vent their  trying  upon  their  fellow-citizens  or  fellow -subjects  their  wild, 
impracticable,  and  absurd  financial  theories.  Incompetency  in  high  office 
is  dear  at  no  price  at  all,  while  competency  in  such  a  place  is  cheap  at 
any  price  that  may  be  demanded.  But,  alas!  it  is  to-day  as  it  was  in 
the  days  of  Oxenstiern,  the  great  Chancellor  of  Gustavus  Adolphus, 
when  he  said  to  his  son  :  "You  do  not  know,  my  son,  with  how  little 
wisdom  men  are  governed." 

If  for  no  other  reason  than  because  of  the  stupidity  and  the  ineffi- 
ciency of  the  rulers  of  the  nations  of  the  world,  to  none  of  them 
sliould  be  entrusted  control  over  the  question  of  the  volume  of  the 
"current  money  of  the  realm."  This  should  alone  be  determined  l)y 
the  wants  of  the  people,  and  can  only  be  done  by  means  of  national 
paper  money,  interchangeable  with  bonds — tfie  same  plan  which  is  advo- 
cated in  this  country,  and  is  known  as  the  3.65  bond  system,  for  "in 
the  interchangeability  (at  the  option  of  the  holder)  of  national  paper 
money  with  government  bonds  bearing  a  fixed  rate  of  interest,  there  is 
a  subtle  principle  that  will  regulate  the  movements  of  finance  and  com- 
merce as  accurately  as  the  motion  of  the  steam-engine  is  regulated  by 
its  '  governor.'  Such  paper-money  tokens  would  be  much  nearer  perfect 
standards  of  payment  than  gold  and  silver  ever  have  been  or  can  be," 
and  at  the  same  time  the  system  would  cause  to  be  avoided  in  this  the 
most  vital  function  of  the  body  politic  all  danger  from  the  "little  wis- 
dom" with  which  "  men  are  governed." 

HENRY  CAREY  BAIRD. 

Philadelphia,  August  4, 1874.        -  >  >  j  ....    j  .    i  .  • 

NOTE  OCTOBER  15,  1875. 

The  policy  of  the  Bauk  of  France  and  of  the  French  government  under  M. 
Magiie,  as  finance  minister,  whioli  is  condemned  in  the  foregoing  pages,  has 
more  recently  been  somewhat  modifled  in  tlie  right  direction.  M.  Magne  was 
succeeded  in  office  by  M.  Bodet  July,  1874,  and  the  latter  by  M.  Leon  Say, 
iMarcli,  1875.  While  between  October  30,  1873,  and  June  -5,  1874,  eight  niontlis, 
tlie  circulation  of  the  bank  was  contracted  $107,000,000;  it  was  contracted,  be- 
tween June  U5,  1874,  and  September  23,  1875,  lifteen  mouths,  but  $20,000,000, 
leaving  it  at  the  latter  date  at  $409,000,000.*  Even  this  more  moderate  degree 
of  contraction  it  was  not  possible  to  carry  forward  without  interruption,  for 
while  on  December  24,  1874,  the  circulation  was  expanded  to  $510,000,000,  it 
had  by  December  31,  1874,  been  further  expanded  to  $531,000,000,  and  was  not 
brought  back  again  to  $510,000,1:00  until  March  IS,  1875.  Between  July  1, 
1874,  and  August  31,  1875,  there  was  a  net  import  of  specie  and  bullion  into 
France  of  $11)7,408,150,  of  which  but  $85,700,000  has  been  added  to  the  bank- 
balance,  leaving  $81,700,000  of  it  with  the  people.  Deducting  the  $20,000,000, 
the  contraction  of  ti»e  bank  circulation,  from  this  $81,700,000,  will  give  a  net 
increase  of  money  of  all  kinds  among  the  people,  within  fifteen  months,  June 
25,  1874,  to  September  23,  1875,  of  $55,700,000. 

Thj  people  of  France  are  not  so  much  indebted  to  intelligent  consideration 

*  Since  the  foregoing  has  been  put  in  type,  the  returns  of  the  bank  to  Sept.  .30, 1875, 
have  come  to  hand.  The  circulation  on  that  date  hnd  been  expanded  to  $484,000,000, 
and  money  was  in  active  demand  in  Paris. 


9 

for  themselves  and  their  fortunes  for  relief  from  violent  contraction  of  the  bank 
circulation  as  to  the  necessities  of  the  government.  Tlie  latter  has  fortunately 
for  the  people  found  its  hands  pretty  full  in  providing  for  current  expenses  and 
interest  on  the  public  debt,  and  there  iias  been  a  decided  opposition  to  borrowing 
money  at  five  per  cent,  with  which  to  pay  to  the  bank  a  loan  made  at  one  per 
cent,  in  consideration  of  its  being  allowed  to  suspend  specie  payments.  The  war 
loan  of  $306,000,0UU  obtained  from  the  bank,  which  by  June  25,  lb74,  had  been 
reduced  $133,000,000,  has  since  that  date  been  reduced  but  $48,000,000,  and 
now  stands  at  $125,000,000.  Had  it  been  convenient  for  the  government  more 
rapidly  to  pay  off  this  debt  during  the  past  fifteen  months,  the  currency  would 
have  been  contracted  accordingly — the  absence  of  contraction  being  more  a  rellex 
of  the  financial  necessities  of  the  government  than  of  the  people,  or  of  any  sympa- 
thy for  the  latter  on  the  part  of  either  the  government  or  the  bank.  Indeed  re- 
sumption of  specie  paymeutij  has  been  determined  upon  for  January,  1878,  because 
by  that  time  it  is  estimated  that  the  debt  due  to  the  bank  will  be  reduced  to 
$60,000,000 — the  people  not  being  a  factor  in  the  calculation.  In  the  item  of 
the  private  loans  of  the  bank  the  small  measure  of  consideration  for  the  people 
is  more  cleat ly  shown  than  in  the  circulation.  While  October  30,  ly73,  these 
loans  stood  at  $277,000,000,  they  were  June  25,  1874,  at  $170,000,000,  and  Sep- 
tember 23,  1875,  at  $119,000,000,  showing  a  contraction  in  less  than  two  years 
of  $158,000,000,  or  57  per  cent.  For  selfishness  this  is  probably  without  a 
parallel  in  the  history  of  banking,  except  in  the  action  of  the  Bank  of  Eng- 
land, which  between  1815  and  1817,  in  preparing  for  resumption,  reduced  its 
discounts  from  £14,917,000  to  £3,900,600. 

Amid  such  criminal  blundering,  it  happens  most  fortunately  for  the  people  of 
France  tbat  they  have  a  specie  circulation  of  not  less  than  $1,250,000,000, 
and  have  always  largely  done  their  business  for  and  with  cash,  relying  but 
little  on  bank  loans,  deposits  and  checks  as  means  c-  :  laking  payments,  the 
private  deposits  in  the  I3ank  of  France  Sept.  23,  1875,  eing  but  $57,400,0U0.* 
Had  France  such  a  system  as  that  of  Great  Britain,  where  $600,000,000  of  spe- 
cie|-  serves  as  a  so-called  "basis"  for  83,840,000,000  of  bank  de{.osit3t  and 
$3,500,000,000  of  discounts  and  loans, §  such  a  policy  as  that  pursuvi  by  France 
within  the  past  two  years  would  long  since  ^lave  resulted  in  wide-spread  bank- 
ruptcy and  ruin.  France  has,  indeed,  surprised  the  world  by  her  financial  feats 
since  September,  1870,  but  it  has  been  due  more  to  the  necessities  of  the  govern- 
tueut  which  drove  the  bank  to  suspension,  and  to  the  country's  inherent  finan- 
cial and  industrial  strength  than  to  tbe  ability  of  her  finance  ministers  or 
government.  From  the  evidence  presented  to  us,  there  is  no  reason  to  doubt 
that  under  like  circumstances  her  authorities  would  have  committed  blunders 
equal  in  extent  and  fatality  to  those  of  our  McCullochs,  Boutwells,  Richard- 
sons,  and  Bristows,  or  to  those  of  the  stupid  rulers  of  Germany  since  the  close 
of  the  war  of  1870-71. 

We  repeat  it,  a  national  debt  becomes  a  national  blessing,  by  reason  of  its  forcing 
the  authorities  of  a  country  to  pursue  such  u  jiolici/  as  is  for  the  public  weal.  En- 
lightened statesmanship  is  capable  of  giving  to  a  State  all  such  blessings,  unac- 
companied by  any  of  the  burdens  and  other  drawbacks  of  such  a  debt  ;  but 
what  people  has  ever  found  and  enjoyed  such  statesmanship?  Hardly  a 
single  one  in  the  world's  history. 

*  M.  Pinard,  Manager  of  the  Comptoir  d^ Escompte,  of  Paris,  testified  before  the 
French  Coinniission  of  Inquiry,  ]8f)5-68,  that  the  grentest  efibrts  had  been  made  by 
that  institution  to  induce  French  merchants  and  shopkeepers  to  adopt  English  habits 
in  respect  to  the  use  of  checks  and  the  keeping  of  bank  accounts,  but  in  vain  ;  their 
prejudices  were  invincible ;  "  it  was  no  use  reasoning  with  them,  they  would  not  do  it, 
because  they  would  not." 

t  Considerably  over  $400,000,000  of  this  specie  is,  however,  permanently  out  in  cir- 
culation among  the  people,  the  Bank  of  Engiund,  which,  according  to  the  London 
Economist,  holds  "the  only  reserve  the  nation  possesses,"  having  had  Sept.  29,  1875, 
but  $137,000,000  of  it. 

X  See  p.  7,  Banking  and  Currency.  A  Letter  to  Henry  Hucks  Gibbs,  Esq.,  Gov.  of  the 
Bank  of  Eugii.nd,  etc.  By  Henry  R.  Qrenf6ll,  Director  of  the  Bank  of  England. 
London  :  Effingham  Wilson,  1875. 

\  See  p.  21,  The  Banks  of  Issue  Question.  Memorial  Addressed  to  the  Gover'  r  .  ..w 
Court  of  Directors  of  the  Bank  of  England,  and  submitted  to  the  Select  Cr-  iltee  of 
the  House  of  Commons  of  1875.     By  iirnest  Seyd,     London  :  Edw.  Stunfo  U,  1376. 


10 


.»•-.»■  .  I 


NATIONAL  DISCORD  MJi  DEMORALIZATION. 


The  Cause  and  the  Remedy. 


I:  I       ,         ...v   .1 
'»  I    ■       /  I* t 


From  The  PniLADSLPHiA  Press,  October  1,  1874. 

Perhaps  at  no  previous  period  in  our  history  have  there  been  so 
many  misgivings  amongst  thoughtful  and  patriotic  men  as  to  the 
success  and  permanency  of  our  institutions  as  at  present.  Discord 
exists  throughout  the  land  between  the  various  interests,  races,  and 
sections,  and  between  the  people  and  their  rulers.  Then  it  cannot  be 
disguised  that  there  is  a  decline  in  public  morals,  and  that  jobbery, 
corruption,  and  robbery  preside  over  the  municipal  governments  of 
most  of  our  cities  and  large  towns.  To-day  a  man  pays  almost  or  quite 
as  much  in  the  form  of  taxes  for  the  privilege  of  liviug  in  his  own  house 
in  one  of  our  cities  as  he  did  twenty  years  ago  in  rent  for  living  in  a 
similar  one  which  belonged  to  another,  and  the  saddest  feature  of  this  sad 
business  is  that  these  evils  grow  as  time  proceeds  upon  its  onward  course. 

Many  well-meant  and  vigorous  efforts  have  been  made  in  this  city  to 
bring  about  a  reform,  but  thus  far  they  have  met  with  but  moderate 
success.  Notwithstanding  this  we  believe  that  the  practical  solution  of 
this  question  of  municipal  government  under  republican  institutions  is 
simple,  and  not  only  simple,  but  that  the  measures  necessary  to  solve 
it  are  such  as  will  prove  beneficent  to  every  section  of  the  laud  and  to 
the  entire  people  thereof.     ,..  "• ,//."..  ',-.';"■.".!  '.1,' 

Let  the  whole  people  be  set  to  work  and  kept  at  work  at  profitable 
employments.  Let  the  industries  of  the  country  once  more  be  vitalized 
us  those  of  the  loyal  States  were  at  the  close  of  the  war,  and  kept 
steadily  so,  and  the  pressure  upon  "  the  public  crib"  will  by  degrees  be 
lightened,  and  be  finally,  almost  if  not  wholly,  removed. 

A  republican,  above  and  beyond  all  other  forms  of  government, 
demands  and  will  have  intelligence  and  virtue  among  its  people,  with 
whom  all  power  is  finally  lodged.  Without  a  large  measure  of  these  it 
will  cease  to  exist  as  such,  and  a  despotism  will  take  its  place.  Steadily 
maintained  prosperity  is  the  one  and  only  foundatioi  upon  which  such 
intelligence  and  virtue  can  permanently  rest.  While  the  universal 
education  of  the  people  is  acknowledged  to  be  an  absolute  necessity 
under  free  iustitutious,  such  education  accompanied  by  a  condition  of 


u 

things  which  leads  to  enforced  idleness  is  but  the  preliminary  preparntion 
of  a  large  body  of  men  for  living  by  their  wits — a  mode  of  existence 
over  which  virtue  holds  but  moderate  sway.  In  the  presence  of  such  a 
body  of  men,  republican  institutions  may  even  become  an  instrument  of 
tyranny  and  oppression. 

We  do  not  hesitate  to  affirm  our  full  and  entire  conviction  that  the 
steady  and  persistent  following  of  a  policy  which  will  give  this  country 
permanent  prosperity,  and  banish  from  it  forever  all  financial  or  rather 
credit  crises,  will  finally  relieve  us  from  the  control  of  that  corruption 
which  now  threatens  m  with  destruction,  and  that  no  other  agency 
whatsoever  will  do  it.  Set  the  people  to  work,  as  they  can  and  should 
be,  and  "  the  cohesive  power  of  public  plunder"  will  cease  to  be  the 
ruling  instinct  of  party  leaders  and  their  immediate  followers,  for  the 
want  of  snfificient  backing. 

The  first  and  most  important  step  towards  this  desirable  end  is  for 
our  rulers  to  relieve  their  minds  of  all  belief  in  the  idea  that  any  human 
judgment  is  capable  of  ascertaining,  d  priori,  how  much  currency  a 
country  or  a  people  need,  and  for  them  to  embrace  the  necessary  one 
that  public  demano,  and  it  alone,  is  capable  of  determining  that  great 
question.  Then  will  be  banished  from  our  midst  the  most  dangerous 
and  far-reaching  piece  of  empiricism  in  all  legislation,  an  empiricism 
which  grows  out  of  the  practice  of  tyrannical  governments,  and  is  fast 
demoralizing  us  by  forcing  us  to  use  the  credit  system,  to  be  followed 
by  credit  crises,  bankruptcy,  bankrupt  laws,  ruin,  stagnation,  and  wide- 
spread misery.  Let  these  rulers  so  far  restore  to  the  people  the  power 
to  determine  the  volume  of  th3  currency  as  to  give  them  a  3-65  bond, 
interchangeable  with  currency,  for  "in  the  interchangeability,  at  the 
option  of  the  holder,  of  national  paper  money  with  government  bonds 
hearing  a  fixed  rate  of  interest,  there  is  a  subtle  principle  that  will 
regulate  the  movements  of  finance  and  commerce  as  accurately  as  the 
motion  of  the  steam-engine  is  regulated  by  its  governor.  Such  paper- 
money  tokens  would  be  nearer  perfect  standards  of  payment  than  gold 
and  silver  ever  have  been  or  ever  can  be."  Under  such  a  monetary 
system  our  country  would  again  take  upon  itself  the  prosperity  which 
once  it  knew,  and,  ceasing  to  be  obliged  to  substitute  the  credit  system 
for  currency,  that  prosperity  would  be  permanent,  and  no  crisis  could 
possibly  arise,  as  all  could  deal  for  cash,  and  few  would  sell  on  credit. 
With  thai  prosperity  "  the  blessed  gospel  of  work"  would  insure  to  us 
alike  public  peace  and  private  morals,  and  then  need  no  one  despair  of 
that  Republic  which  is  the  hope  of  the  downtrodUeu  and  the  oppressed 
throughout  the  world.  ^  ««»i«jn,  w  i      tnj*»; 


12 


THE   SOUTH. 


Ati  Attempt  to  Indicate  the  I^ature  and  the  Cause  of  its 
Diseases  and  the  liemediesfor  them. 

From  the  New  Youk  Tribune,  October  22,  1874. 

To  the  Editor  of  the  Tribune : —         •      »  f 

Sir  :  When  a  locomotive  has  run  off  the  track,  one  first-class  mechanic 
with  ten  men  to  aid  him  will  be  more  likely  to  get  it  on  again  than  would 
fifty  ignorant  boors  without  the  directing  hand  and  the  intelligence  and 
ingenuity  of  such  a  mechanic.  On  a  recent  occasion  the  iron-clad  Inde- 
pendencia,  which  was  being  built  upon  the  Thames  for  the  Brazilian 
Government,  stuck  on  the  ways  in  being  launciied,  and  was  thereby,  by 
reason  of  her  immense  weight,  wrecked.  It  was  thought  probable  by 
The  London  Times  that  it  might  be  necessary  to  blow  her  to  pieces 
with  powder  in  order  to  get  her  out  of  the  way.  However,  the  intellect 
of  one  good  mechanic,  Mr.  John  Dudgeon,  was  equal  to  the  solution  of 
the  problem ;  and  her  leaks  being  stopped  and  pumps  started  she  was 
soon  cleared  of  water,  and  by  means  of  the  proper  application  of  power 
was  floated,  and  will  ^be  docked,  and,  it  is  not  impossible,  repaired  and 
rendered  fit  for  service. 

Now  the  Southern  States,  it  strikes  us,  are  at  this  moment  in  a  posi- 
tion which  finds  its  analogy  in  the  condition  of  the  Independencia, 
wrecked,  water-logged,  and  apparently  ruined  beyond  redemption. 
Blundering  violence  will  be  apt  to  do  more  harm  than  good,  to  aggravate 
the  disease,  and  to  render  the  case  even  still  more  desperate.  What  is  now 
necessary  is  not  such  violence,  but  the  application  of  an  ocpial  amount 
of  good  sound  sense  with  that  used  with  the  Inde[)endencia.  Wo  be- 
lieve it  quite  possible  clearly  to  ascertain  what  are  the  causes  of  trouble 
at  the  South,  and  what  are  the  remedies  to  be  aj)plied,  and  that  they 
can  be  applied  v.itb  a  result  quite  as  happy  as  that  in  the  case  of  the 
wrecked  iron-clad.  ■  |,  f^   a    ..  ■  •    II,"   |.# 

With  few  diversified  industries,  and,  therefore,  with  but  feeble  socie- 
tary  life,  the  South  was  unable  before  the  war  to  throw  off  the  disease 
of  slavery,  a  disease  which  can  only  permanently  retain  its  liold  upon 
communities  which  are  i»oor.     The  almost  entire  absence  of  these  Indus- 


18 

tries  deprived  her  of  the  presence  of  a  large  and  powerful  middle  class— 
the  bulwark  and  defence  of  a  free  State,  and  the  very  diss  which 
saved  the  Government  of  these  United  States  in  the  hour  of  its  greatest 
peril.  Such  being  the  state  of  its  society  it  became  an  easy  task  for  a 
few  infatuated  demagogues  so  to  fan  the  flames  as  to  precipitate  a  reliel- 
lion  and  a  war.  As  ignorant  as  their  ignorant  followers  as  to  what 
were  the  prerequisites  necessary  to  the  foundation  of  a  great  nation, 
these  demagogues  never  for  one  moment  doubted  the  successful  result  of 
the  issue,  seeing  that  they  held  control  of  one  great  staple — cotton,  upon 
the  supply  of  which  depended  immense  interests,  as  well  in  the  North  as 
in  Europe,  Bui,  after  a  bloody  struggle  of  four  years,  tl.eir  confederacy 
went  down  before  the  armies  of  the  Union,  backed  as  they  were  by  that 
intelligent  and  thoroughly  vitalized  society  of  the  North,  which  was  the 
healihy  and  vigorous  offs[)ring  of  its  diversified  industries. 

The  close  of  the  war  brought  under  the  control  of  the  Government  of 
the  United  States  a  number  of  conquered  States,  which,  with  but  limited 
resources,  had  made  an  herculean  etlort,  adopting  the  business  of  war 
and  its  sustenance,  as  well-nigh  the  sole  occupation  of  its  jjcople.  AVlien, 
after  such  an  effort,  such  a  people  succumb,  they  must  indeed  be  ruined, 
and  in  fact  the  South  surrendered  solely  because  of  this  ruin. 

The  American  body-politic  now  presented  to  view  a  picture  very  much 
akin  to  that  of  a  body-physicai  one-half  of  which  is  paralyzed,  while 
the  other  half  is  thoroughly  vitalized.  IIow  to  vitalize  the  paralyzed 
half  of  this  body-politic  and  bring  it  up  to  the  same  healthy  and  vigor- 
ous condition  as  that  of  the  other  half,  was  one  of  the  most  interesting 
and  important  problems  ever  presented  for  the  consideration  of  a 
government.  Especially  did  this  question  concern  the  then  Finai'ce 
Minister,  Hugh  McCulloch.  Did  he  attempt  to  grapple  with  it?  Nol 
not  in  the  least  1  So  far  from  doing  so  he  concentrated  his  thoughts 
upon  certain  theories  of  the  schoolmen  about  money,  which  theories 
were  so  far  iVom  being  universally  accepted  as  i)rinciples  that  they  were 
entirely  repudiated  and  treated  as  utterly  false  by  many  of  the  best 
thinkers  and  writers  upon  the  subject. 

This  Finance  Minister,  i)lacing  his  theories  far  al)ove  the  teachings  of 
the  marvellous  financial  results  of  the  war,  as  quickly  as  possible  put  tlu)se 
theories  into  practical  operation,  and  it  was  soon  foui.d  that  even  the 
loyal  States  were  quite  unable  to  pass  through  the  ordeal  thus  forced 
upon  them,  and  peace,  so  far  from  bringing  to  them  prosperity  and 
happiness,. brought  to  them  adversity  and  misery.  IJut  for  the  prompt 
intervention  of  Congress  in  arresting  the  Secretary's  scheme  of  the  con- 
traction of  the  currency,  a  crisis  would  have  occurred  as  early  as  1SG8. 


14 

However,  enongh  was  accomplished  by  Mr.  ^rcCulloch  to  secure  not 
only  tlio  prostration  of  the  industries  of  the  peophe,  and  to  make  these 
people  the  victims  of  the  usurer,  but  finally  to  force  the  Government 
itself  to  rely  upon  syndicates  of  foreign  bankers  to  carry  that  national 
indebtedness  which  in  the  midst  of  war  and  destruction  had  been  readily 
and  cheerfully  carried  at  home.*  Eventually  the  policy  culminated  in 
a  do«;olating  financial  (or  rather  credit)  crisis,  with  its  accompaniments — 
ruin,  stagnation,  and  widespread  misery. 

If  such  have  been  the  results  in  the  more  prosperous  and  wealthy 
North,  what  might  we  expect  to  find  iu  the  prostrate  South,  which  was 
left  at  the  close  of  the  war  almost  without  any  currency  whatever  ?  AVhat 
do  we  now  find  there?  Ruin,  almost  without  a  parallel  in  the  history 
of  the  world,  to  have  been  accomplished  in  so  brief  a  period  of  time — 
every  legitimate  interest  well  nigh  without  exception  destroyed,  men  of 
fortune  rendered  bankrupt,  land  valueless,  taxation  in  thousands  of  cases 
amounting  to  confiscation,  a  general  state  of  demoralization,  and  society 
being  fast  resolved  into  its  elements — in  a  word,  all  signs  pointing  to  a 
near  a])proach  in  a  great  portion  of  that  country  to  a  condition  of  things 
such  as  has  long  existed  in  Ireland,  Spain,  Sicily,  Greece,  Mexico,  and 
South  America. 

But  it  may,  in  reply,  be  said  that  this  state  of  affairs  comes  of  a  change 
from  slavery  to  freedom,  and  from  the  enfranchisement  of  the  freedman. 

♦  Had  Hu;;h  McCuUoch  been  a  real  statesman,  and  not  a  mere  empiric  in  the 
practice  of  tliis  most  important  of  all  profes.sions,  he  would  clearly  have  fore- 
seen prfoiselj  this  result,  because  he  would  have  known  of  England's  experi- 
ence in  adopting  in  1819-23  those  very  financial  theories  which  he  was  about 
to  force  upon  his  countrymen.  In  1793,  Great  Britain,  under  the  leadership  of 
William  I'itt,  declared  war  against  France,  and  by  February  27, 1797,  it  became 
necessary  for  the  Bank  of  England  to  suspend  specie  payments.  Mr.  Pitt  sub- 
sequently declared  that  this  suspension  was  to  the  Government  equivalent  to 
'^finding  a  mnuntaln  of  (/old,'' ^  and  so  it  was,  for  the  bank,  expanding  its  circu- 
lation and  loans,  gave  prosperity  to  the  people  and  power  to  the  State.  Thus 
was  Great  Britain  enabled,  by  1815,  finally  to  crush  the  power  of  Napoleon  at 
Waterloo.  But  as  soon  as  the  pressure  of  war  was  removed,  the  theorists,  who 
had  had  to  content  themselves  in  proclaiming  their  theories  during  the  con- 
tinuance of  the  war,  were  allowed  supreme  control  over  the  people,  their  for- 
tunes, and  their  happiness.  In  1819  Peel's  bill  for  the  resumption  of  specie  pay- 
ments. May  1,  1823,  passed,  and  was  followed  by  immediate  and  sharp  contrac- 
tion; and  the  people  wire  ruined  by  thousands.  Wiiile  from  181(5  to  1822 
inclusive,  the  money  annually  applie»l  to  the  redaction  of  the  public  debt 
averaged  over  £1(1,000,000,  in  182:Ht  fell  to  £7,482,32.5,  and  never  after  rose 
above  tiiat  amount,  except  in  1824,  when  it  was  £10.025,059,  after  which  it 
steadily  fell  reaching  £5ti06  iu  1S32,  with  a  deficiency  of  £12,000,000  in  the  six 
years  1837  to  1842  inclusive.  Since  reaching  a  "Hpeoie  basis"  in  1S23,  Great 
Britain  has  practically  ceased  to  pay  off  her  public  debt.  Thus  was  it  but  need- 
less cruelty  towards  the  people,  and  wicked  blundering  towards  the  State,  lor 
llu^h  McCulloch  once  more  to  try  this  already  tried  experiment  upon  his  coun- 
trymen, when  he  had  but  to  read  the  terrible  story  of  England's  experiem-e, 
to  see  liow  would  inevitably  come  a  decline  in  the  people's  prosperity,  and  from 
it  would  result  the  tiuanoial  weakueas  of  the  National  Treasury. 


•/•■    '  ■     --r:^'.  .16 

It  cannot  be  denied  that  these  changes  have  had  their  influence,  but  the 
great  demoralization  of  society  throughout  the  South  has  come  of  tlie 
prostration  of  nearly  every  interest  and  from  the  extreme  difficulty  of 
finding  any  field  for  employment  which  will  yield  a  competency  or  even 
a  livelihood,  just  as  from  like  causes  brigandage  has  for  centuries  been 
an  established  institution  in  Italy,  and  as  the  well-known  corruption  of 
officials,  high  and  low,  in  Mexico  has  long  held  sway  over  her  destinies. 

If  then,  the  causes  of  the  existing  condition  of  thii^gs  in  that  unhappy 
and  discontented  section  of  our  country  be  such  as  are  above  indicated, 
what  is  the  remedy  ?  Clearly  ai^  beyond  a  question  to  set  the  people 
to  work  with  the  least  possible  delay,  and  to  keep  them  at  work,  to  bring 
their  industries  finally  up  to,  and  even  beyond,  that  condition  in  which 
those  of  the  loyal  States  were  found  at  the  close  of  the  war,  A  policy 
which  will  do  this  will  promptly  improve,  not  merely  the  material,  but 
the  moral  condition  of  the  people,  and  will  cause  the  reorganization  of 
society,  and  in  time  make  those  people  who  compose  it  as  happy,  as  con- 
tented, as  loyal,  and  as  true  as  any  in  this  country,  or  indeed  upon 
the  face  of  the  earth,  anid  no  other  policy  will.  The  history  of  mankind 
from  the  earliest  ages  to  the  present  hour,  and  more  especially  in  modern 
times,  teaches  this  lesson  with  so  much  clearness  and  force  that  any  one 
of  ordinary  intelligence  and  reading  may,  upon  slight  examination,  fully 
satisfy  himself  of  its  exact  truth. 

As  there  can  be  no  thorough  industrial  vitality  without  an  entirely 
adequate  f;apply  of  money  to  meet  the  daily  and  hourly  wants  of  the 
active  intercourse  between  man  and  man,  and  thus  prevent  a  waste  of 
labor  power,  the  primary  step  in  the  great  work  of  regenerating  the 
South  is  for  the  people  of  the  whole  nation  to  re-enter  upon  the  exer- 
cise of  the  right  to  determine  by  themselves,  and  for  themselves  aloue, 
the  volume  of  that  money.  For  as  they  do  not  permit  Congress  to  ^ix 
a  limit  to  the  supply  of  potatoes,  wheat,  corn,  horses,  oxen,  cows,  or 
sheep  which  shall  be  furnished  to  the  country,  so  they  cannot  in  justice 
to  themselves  permit  it  to  determine  how  much  money  shall  be,  seting 
how  far  more  universal  is  the  necessity  for  tliis  latter,  than  for  any  one, 
or  indeed  for  all  of  the  former  combined.  Further,  to  allow  any  such 
body  to  provide  bylaw  that  "the  current  money  of  the  realm,"  th«  ojily 
legal  tender,  shall  consist  of  gold  and  silver  alone,  while  that  body  does 
not  charge  itself  with  the  duty  of  seeing  that  the  country  has  an  adequate 
supply  of  these  metals,  is  to  submit  to  even  a  still  deejjer  injustice  than 
Uiat  of  a  mere  fixed  and  arbitrary  limit  to  the  volume  of  the  money,  for 
the  reasons  that  the  supply  of  such  metals  is  notoriously  inadequate  to 
the  wants  of  mankind,  and  that  they  steadily  flow /rom  those  communi- 


16 

ties  and  countries  wliicli  are  \)oot  and  in  which  they  are  scarce,  to  those 
wliioh  lire  rich  and  in  wliicli  tlicy  are  abundant — tlius  demonstrating  a 
power  ill  a  cominunity  or  a  country  to  command  these  metals  in  an  inverse 
ratio  to  tiieir  r.tcessity  for  theni.  If  any  vested  interests  are  sacrificed 
by  the  re-entry  of  the  people  upon  the  exercise  of  this  natural  right  to 
determine  the  quantity  and  the  character  of  their  mojicy,  then  those 
vested  interests  must  give  way.  They  should  neither  in  law  nov  in 
equity  longer  l)e  permitted  to  block  the  road,  for  the  peo])le  have  long 
and  sorely  suil'ered,  and  do  now  suffer  by  reason  of  the  withholding  from 
them  of  this  right,  and  they  must  in  justice  to  themselves  resume  it. 

The  only  system  ever  devised  for  fnrnisiung  a  country  with  a  volume 
of  money  iii  exact  accordance  with  the  needs  of  that  country — neither 
in  dcliciency  nor  in  excess — is  that  by  which  it  is  proposed  thiit  the 
public  debt  of  the  United  States  shall  be  convened  into  bonds  bearing 
3.65  per  cent  interest,  and  legul-tender  notes  interchangeable  with  each 
other  at  the  pleasure  of  the  holder.  It  has  been  well  and  truly  said 
that  "  in  the  interchangeahility,  at  the  option  of  the  holder,  of  national 
paper  money  with  government  bonds'' bearing  a  fixed  rate  of  interest, 
there  is  a  subtile  principle  that  v)i.ll  regulate  the  movements  of  finance 
and  commerce  as  accurately  as  the  motion  of  the  steam-engine  is  regu- 
lated by  its  governor.  Buch  jjaper  money  tokens  would  be  much  nearer 
perfect  slandai'ds  of  payment  than  gold  and  silver  ever  have  been  or  ever 
can  be.  The  use  of  gold  or  other  merchandise  as  money  is  a  barbarism 
unworthy  of  the  age." 

In  conclusion,  let  it  again  and  most  earnestly  be  urged  that  we  do 
not  permit  ourselves  or  our  government  to  be  guilty  of  any  ignorant  and 
blundering  violence  in  the  treatment  of  the  South  in  its  present  abnor- 
mal and  demoralized  condition,  but  that  we  rather  look  into  the  special 
features  of  the  case,  and  endeavor  to  ascertain  the  causes  at  work  in 
producing  its  diseases,  and  then  apply  an  equal  measure  of  good  sound 
sense  with  that  applied  to  the  Independencia,  and  we  may  fully  depend 
upon  it  that  the  effect  will  be  equally  happy.  Let  us  bear  in  mind  that 
we  at  the  North  are  at  this  v^ry  hour  suffering  from  a  great  and  growing 
corruption  and  demoralization  in  our  own  midst,  and  that  it  is  there- 
fore quite  within  the  range  of  possibility  that  such  intelligent  treatment 
as  is  intended  to  meet  the  case  of  the  South  alone,  may  even  at  the 
same  time  prove  to  be  the  very  remedy  needed  for  ourselves,  and  that  it 
may  thus  become  that  good  which  "  blesseth  him  that  gives  as  well  as 

him  that  takes."  ;  xi  .  , 

HENRY  CAREY  BAIRD. 


PUILADELPUIA,  Oot.  13,  1874. 


;m  rf-.i  , 


